The US dollar jumps as strong employment undermines the reasons for a rate cut in the US

Dollar on a broader front higher

This is the definitive US employment report before July 31st, which will make the task of the Fed considerably more difficult.

The US built 224,000 new jobs a month, after creating just 72,000 in May. The market priced in a 27% chance of a 50 basis point cut off the data. After that he fell to only 11%.

It is surprising that it remains above zero and the market is extremely confident that a cycle of cuts is imminent. The number of jobs was accompanied by an increase in the unemployment rate by one tick from 3.6% to 3.7%, which, however, was accompanied by rising labor force participation.

The US dollar has skyrocketed after the report climbing 30-60 pips over the board. 1

0-year US government bond yields rose 5.5 basis points to 2.01%.

The economic bears will argue that employment is a lagging indicator, and that's right. At the same time, there are only a few indicators worldwide that argue for an aggressive rate cut.

The Fed has repeatedly pointed to trade uncertainties, but this development has improved since the G20.

With the dollar move, the cable moves closer to the June low of 1.2506. Watch for breaks.